Well, I kind of got burned today by a realtor.
He calls me this past week to meet him at a project involving a substantial strutural repair to a house. He mentioned it could cost $50-75k so needless to say I am interested.
So we meet on site today and after a walk through he mentions there is one caveat….the homeowner cannot pay me until the house sells! Not one penny as its a short sale and they are already behind the Eight Ball. WTF?! I drove an hour to see this during midday and of course he never mentioned this before during our chats.
So I was professional and declined that agreement and left him my cards as I told him I would like to work the project but couldn’t do it under those terms as I cannot afford the “loan” to them of all my time, labor and materials awaiting the sale of the house.
I was mad but laughed it off with a buddy later over a cup of coffee. But honestly, what a jerk thing to do. I would never try to dupe someone like that just to get them out to look at the job.
Oh well, another great chapter for my book in my life in construction.
Anyone ever had something like that happen?
Replies
i think we've all had that happen. i once worked for a company that made it as hard as possible to get their phone number because they were so tired of getting yanked around with false leads or clients milking them for free designs. you had to be referred by a trusted former client to get a visit.
how did this particular realtor get your number?
k
hey- it could have been much, much worse. only time and gas money lost. if you think of it as part of the cost of doing business, it's not too bad. still annoying, though. maybe you'll ask a few general questions about financing for jobs when realtors call...
Ya done right.
In this economy, is is at least possible that the deal would have gone bad even after the work was done. And if the sale never happens, you never get paid.
Maybe everyone within 59 minutes knows he's a jerk.
I can imagine circumstances where you might be able to perform work and be paid out of escrow, but it doesn't sound like you have them. If the buyer has deposited enough money into escrow to cover your work and has removed all contingencies to the sale, and the lender has agreed to fund pending completion of the work, you might have a deal. Obviously you would need to fly in your legal team on their private jet to work out the details, and charge a small fortune on top of the actual value of the work just to deal with the administration of it all.
I just inspected a house for someone offering to buy it. They are likely to require some things dealt with before closing. In this particular case I would be willing to contract with the seller to perform the work and be paid from escrow. I would also of course be willing to perform the work for the buyer after closing, but they are the types that will want it done before it's theirs. A little bit of legal manuevering would be required on my part, and I would charge for it.
I had a big contractor call me about bidding on a pretty large trim package for a custom home.The house was started and foundation was in , framing anyday. I said sure, I'll come get the prints and work something up ( it was early in my career, I was hungry). They said , no we can't let the prints out of house, can you do it here?
I said OK, went there and had my note pad, calculater, scale ruler..all the stuff I'd use at home. The sec. shows me to an empty office, where the coffee pot is, the rest room...telephone, legal pads, pens and pencils, a calculater..all the jazz. I worked the whole day, on page after page..stairs, moldings , mantels every stick of finished wood work. Took half of the next day too.
I went home and typed up the bid, and sent it. Weeks go by, I call..."well, yeah, we have your $$ and are narrowing it down, in the mean time, we have another..you interested?"
"sure," So I go there and repeat the performance..( you see where this is going yet?) and its another custom, smae level of detail..same amoun of my time.
I sent the bid..and waited. Finally another two weeks, I call..I get someone else on the phone..I ask about the XYZ Job and my bid..whens the building ready.
'Oh..The XYZ Job? well, we didn't get that one, someone else lowballed it"...
It seems they had a free estimater in me..they never had the damm job, they were still gathering prices..bastids.
Live an learn.
Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations
They kill Prophets, for Profits.
there might be oppurtunity in there for ya
if its a short sale then someone is already losing money. either the seller or the mortgage company, usually both.
and you say the place needs 50 to 75K to make it saleable.
and unless they can find some shmuck contractor to hold the paper on the renovation, its not gonna be made saleable or will sell as is usually at a drastic discount, or the owner will lose it in foreclosure (more likely)
put a crazy low ball offer on the place and take that drastic discount. fix it up and put it back on the market. chances are the mortgage company would just like to unload it to someone who can roll it over
in these economic times it doesnt hurt to generate your own work
Maverick,
I like your idea except is a $600k house! Don't really have enough to low ball an offer on that kind of home....but nice thinking.
Mike
Since 'going solo' last Fall, I have had three realtors make the come-on pitch. All have lost interest when I mentioned two of my requirements:
-NO free inspections/ estimates; and,
-Pay promptly, no waiting for the deal to close.
I 'went solo' when 'the boss' retired. Working with him, I had already heard about realtors and their games - so I didn't just fall off the truck.
I like hearing all of your input. I would like the job to work but being it is a short sale, they said they don't even have a way to put money in escrow. Thats kind of scary to me as "eating" that much money if it didn't seel would kill me.
But I did ask where the guy got my name and said he got my b-card from someone. At least I am getting exposure an hour away!!!
I hate to paint everyone from ANY profession with one brush.
But it has been my experience that MOST realtors, attempt to pull these stunts quite often.
They need to sell houses.....quite often, in order to do so, some type of repairs or renovations are necessary.
Working on commission, they don't much care who has to do what, so long as they can make a sale.
It's getting the who to do what where they can run into problems.....so they are quite often less than scrupulous in trying to make that happen.
Good call....you've been warned.
J. D. Reynolds
Home Improvements
Proud recipient of the BT 'Truth In Print' award.
JD,
I know what you mean but I do know others who I have worked for who are great! I guess its just the type of person.
Honestly, it wouldn't have been as bad as if he would have just told me on the phone about the situation. I guess he just thought I was like many in the industry and was really hungry and would take a job under any terms once I got there...
JDRHI,
you are clearly smarter than me---- because I am quite sure I wasted time on at least 80-100 "free estimates" for realtors in the first years of my career About the time I found BREAKTIME I was also realizing" what the hell am I doing???--- Realtors have NEVER resulted in paying projects for me" My all time favorite?
" Steve-- I have a buyer for this house-- it's an FHA deal. The inspector suspects a problem with the roof and so FHA is requiring an inspection by a licensed,insured roofing contractor and we need you to sign this 3 page FHA document GAURANTEEING that the roof won't leak for THREE YEARS. BTW- the seller doesn't have much money ,so could you help us out and shoulder that liability for FREE? No?--you are not interested? why ever not??????? realtors= vermin in my limmited experience
stephen
"No?--you are not interested? why ever not???????"
Because I not stupid comes to mind. Unbelievable that someone would even ask that and do so with a clear concience. DanT
Im glad you wrote that, In all the years i have been in biz i have figured out i have a one percent chance in a hundred of getting a job from a RE. The main thing they want is a price on a roof to use as a bargain chip.No free bids for people that do not own the house either. My fav, i gave 4 roof reports for a broker for 75 bucks a piece, They would not pay me so i went to the broker, he told me to pound sand, I told him i will file a complaint with the RE ethics board, He laughed at me and told me HE was the chairman of the ethics board!!!. Although it was a painful lesson it was a most valuable one, He "got" me but i have a little book.........
"Anyone ever had something like that happen?"
That describes about 90% of my contacts with a realtor.
has one that was very similar ... one of the big money realtors in the rich suburbs ... she stopped by a clients house she sold ... was blown away by my work and asked him for my info. Got a call to take a look at adding a bath.
House had 4.5 baths ... but for the money they wanted to ask ... it "needed" at least 5 baths. Guess it had the least amount of baths on the street, and it was on a big beautiful corner lot.
Was listed for around $500K ... pretty big money around here.
I suggested the most reasonable location ... said we'd do nice name brand stuff but keep the end result as low priced as possible since they were selling. Home owner was thrilled ... realtor was thrilled. I even came up with a quick ballpark ... $45K.
Again ... price was just fine. Then the home owner made a comment to the realtor about paying ... right in front of me ... realtor said ... "oh, we'll just give him the money in full right after the closing" ..
Uh ... No we won't! I was stunned ... but realize I was talking with a realtor ... so not so much. I said Nope ... standard project with standard contract ... both of them wanted to know why I needed paid ... "don't you have accounts with suppliers?"
Like I could just charge everything, and everyone would wait till they sold the house.
She called 2 or 3 more times ... nothing as bad as the first one ... but worthless in the end.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Again ... price was just fine. Then the home owner made a comment to the realtor about paying ... right in front of me ... realtor said ... "oh, we'll just give him the money in full right after the closing" ..
That's just stupid. I'm a realtor, and neither I nor any realtor I know would dream of asking a builder to extend a homeowner a line of credit like that. You're not a friggin' bank (hell, a lot of banks are hardly extending credit right now).
It's not unscrupulous per se to ask someone to accept payment out of proceeds, but it's unrealistic and stupid. Especially for many thousands of dollars. The only way I'd even contemplate it is if:
1. There was a contract for sale accepted by buyer and seller, AND;
2. The sale was contingent on the repairs/updates/etc being done before close of escrow, AND;
3. Escrow would close within a week of the work being completed - in other words, all the other contingencies had been satisfied, and everyone's just waiting for you to get done.
The big problem with a short sale is that essentially the seller is not the homeowner, but the bank. They're the ones agreeing to take less than they're owed on the place, thus they call the shots. The HO is more or less out of the picture, and there is no equity to be paid from.
You'd essentially be paid directly by the bank. Banks are difficult enough for realtors to work with on short sales; I figure they'd be damn near impossible for a builder. Only way I'd consent to do any work on such a home is with a signed contract - with the bank.
Edited 3/6/2009 10:35 pm ET by JasonQ
Good responses, and in line with what David Meiland was saying about his current potential job.
I love bashing realtors- I've met some doozies, and even the merely mediocre ones annoy me, but you have the right approach.
And (I can't believe I'm going to publicly defend realtors!) I know of one sale where the realtor herself secured the $ for the repairs to be done prior to sale, b/c the sellers didn't have any $. She paid the painters, gutter guys and roofing repair co. out of her account to make the sale happen.
Sure, she got her money back, and I suppose $100 more in comission due to the increased value. And, she got her comission quicker.
Still, I was pretty impressed.
k
KFC,
the first house i bought was a land contract deal. My paltry $1500 down payment wasn't enough to cover the realtors commission- he carried the balance for the seller for several months while I paid the seller the regular monthly payments---- he is a pretty good guy---and in fact we now live a few doors away from each other on the same block----- but even HIS realty firm has jerked me around plenty on "free inspections" etc.--- i have never got a nickel of paying work out of his office I still return his calls and from time to time look at stuff for free for HIM--- because buying that house when I was 21 for $1500 down made all the difference in my life------
any other realtor???- pound sand!
stephen
I love bashing realtors- I've met some doozies, and even the merely mediocre ones annoy me, but you have the right approach.
You know who loves bashing realtors even more than contractors and consumers? Other realtors. My work in the industry in eastern Nebraska tells me that:
1. 70% of the agents I and my officemates encounter in my area are decent, ethical and honest.
2. Probably 15-20% are also decent/honest/ethical, but are varying degrees of lazy, which can be almost as damaging as being a
3. Around 10-15% are some combination of stupid, unethical or incompetent. There is some overlap w/ laziness as well.
From what I gather, that 70% WAG/statistic is somewhat unusual when compared to other areas of the country. Case in point: last year I sold a home to a military couple who were relocating from Alabama. They just couldn't get their heads around the fact that I, the listing agent, or the seller were actually honest and would do whatever we said we were going to do, and that no one was out to screw them. It was a bit of an eye-opener for me.
I don't mind hustle and even a degree of rapaciousness - that's sales. But sleazy behavior really brings out my inner Don Corleone - these are people's lives we're screwing with here. I'm probably hopelessly naive, but screw it - at the end, all I have is my name.
Forgot this bit:
I know of one sale where the realtor herself secured the $ for the repairs to be done prior to sale, b/c the sellers didn't have any $. She paid the painters, gutter guys and roofing repair co. out of her account to make the sale happen.
Sure, she got her money back, and I suppose $100 more in comission due to the increased value. And, she got her comission quicker.
Wow. That's a level of risk I am not prepared to take for any client. Even if I had an ironclad guarantee of getting made whole on my cash outlays, I wouldn't want to take on the legal exposure of being the one who contracted such labor.
In the event of a screwup or faulty workmanship, guess whose name is first on the lawsuit? I'll give references, but even those can get your teat in a wringer - "But the realtor was the one who gave us that HVAC company's number! It's his fault the house blew up!"
Yeah, that was above and beyond.
The sellers were the adult children who had just lost their mom and inherited the place. I think she felt sorry for them.
The market was going gangbusters here, so she didn't really have a lot of risk of eating it. I don't know what her liability policy was like through her office, though.
And, she did get her share of a comission on a $610k sale after all...
k
And, she did get her share of a comission on a $610k sale after all...
Well, since you put it that way... : )
Actually after I posted that I looked at your profile and thought, "Oh, Bay Area. That explains it." I might be willing to take a risk too for those kind of prices. Do you happen to know how much she was into it for?
For me, a $610K sale at my usual rates would net a commission of at least $8500 (if the buyer had an agent). So...yeah.
Edited 3/8/2009 4:58 pm ET by JasonQ
No, I don't know the totals in terms of what she spent or what she made. What she spent on repairs was a straight loan, so that came off the top separately from the comission.
I imagine the seller's comission was about 2.5%, which would be $15,250, but she was through Prudential, and I think they charge desk/office fees and other things (depending on experience level) that can drastically reduce it.
Still not a bad payday, though.
k
'That is just stupid"
You are right, it is. I have lived in the same small town (40k) for 30 years and been a contractor as well as dabbled in real estate. I know most of the agents in town by name and face and a decent number on a business level at least.
It is amazing what they will ask you to do as a contractor. I have gotten numerous calls "Hi Dan, this is ######, and I have a client coming in from Florida because they are thinking of relocating here. One of the houses I am showing them has some structural issues and needs a couple of bath remodels so would you meet us there so you can quote the work for us?" I say for $100 I would be glad to. Silence.
I don't need to point out to you that the odds of ever seeing this work getting done is so slim it would fit between the pages of a book. So at least pay me for my time and gas for crying out loud. The other one is "Dan, we have an accepted offer on a house and the home inspection has turned up a few things. Would you stop over and look over the work, give us a price so we can work this out between the new owner and the seller?" Sure, for $100. Silence. This one has happened at least 15 times the last 5 years. DanT
I have the same issues with insurance work. The h.o. typically calls and says that the ins. co. needs a written bid from a licensed contractor. But I know from experience the ins. will in the end write a check to the h.o., who will hire his neighbor's cousin for pennies on the dollar, and spend the rest elsewhere. So I tell them it will cost $1-2 hundred for a written bid, which they can deduct from the price when I get the job. Only once had someone accept and pay up, and I didn't get the job either."...craftsmanship is first & foremost an expression of the human spirit." - P. Korn
bakersfieldremodel.com
I'm curious now after reading so much of this.
I don't know if it is a matter of regional differences or the way some of us approach these things. i have probably gotten a good half the insurance work I looked at, and have had far less bad experiences with realtors than most are reporting here. both in CO and here in Maine, I cultivated good realtors as a source of referrals and business.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I was thinking the same thing.
I have had realtors recommend me to fix sellers problems dozens of times.
Most times I go out look and start the same day as they are in a rush to get done and reinspected before closing date.
Because it is a rush job and I have to put somebody else off for a day or two I charge a PREMIUM AND TELL THEM IN ADVANCE ,STILL GET THE WORK.
ANDYSZ2WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
You handled it the right way. I had a guy call and wanted a price on a bathroom. I called and made an appointment with his wife. I showed up and there was a 2 guys in a truck unloading tools. I asked if they were working on the job I was supposed to look at? She sheepishly said yes, she forgot that I was coming out to look at it.
Needless to say I was PO'd but did the same. Left a card, said no problem and got back in my truck for my drive back to the shop. For free! DanT
If cash flow wasnt a problem, could you do the work with the agreement to get paid at closing, and immediately put a lien on the house?"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Eddie,
Well yeah but if its $75k of repairs thats about $60k worth of materials and sub labor that I really can't fork out up front. Thats like me giving them a $60k loan. I wish I was in that financial position but I am not.
I did some research and the house has already been on the market for a year. I couldn't carry that note for more than 30 days.
How about you agree to work the next 2 months, and if the bank hits their targets you got paid your regular pay after that?
Doesn't sound like such a great deal huh?
even if cash flow isn't a problem.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Something stinks there...
I am an agent and a contractor. Was a contractor and slowly the agent work is taking over more of my time. I work a fair amount of short sales and foreclosures.
Maybe I am missing something but... Like Jason said, in a short sale the bank is for all intensive purposes the seller in control of the transaction. The HO generally owes more than the house is worth and can't bring that money to the closing table in the form of cash to settle the debt. They are often facing foreclosure and have no money. Every short I have worked needed repairs and the cost of those repairs has always been reflected in the offers by the buyers and repairs are then paid for by the buyers after closing.
So if you do the work, who is supposed to be paying you? At closing there are often instructions from the first lien holder as to who gets paid. If anyone gets anything after the first lien it is always negotiated down and normally around 10 to 25 cents on the dollar many times a lot less. (Just saw a second lien holder take $2500 to settle a $60k debt) So you can't get paid at closing unless you have a contract with the bank, I have never seen or heard of a lender allowing or paying for repairs on a short, they just wait until it is theirs after foreclosure. It is a give away, throwing bad money after bad money, in the lender's mind. The seller can't pay you otherwise they would be paying their way out of the short sale. No buyer in their right mind would pay you to do work on a home they don't own and could very likely go into foreclosure if the bank does not chose to forgive the HO's debt. If you do the work and place a lien on the property and it ends up going back to the bank you get jack.
Agent might have been trying to get an estimate out of you so he/she could justify a lowball offer and the current value to the bank. I have done this before but I always tell the contractor (I can't write the estimate on a home I have a steak in buying or selling) and pay for the estimate out of my pocket, really a SWAG is all I need, and I give the estimate or the name to the buyer and often the contractor gets a chance to redo their bid, get the job and make money. I use the same guys over and over again and they know the deal, further most of them are my past subs. The $200 I spend on an estimate or two is better money spent than advertising if the bids help me close the sale. I have one roofing salesman for a big national company that will bid for free all day long because he has to write a certain number of bids per week per his performance reviews, the price is always high (no funny bidding, the place is just expensive with slick salesmen and ads), which helps my case and the lenders love seeing that name on the letterhead of the bid. One lender gave them the roof repair after the home ended up back with the bank.
Further, the home is really a $475 to $500k home if it needs $50 to $75k in work instead of a $600K house.
I'd stay away from this thing, someone is going to get burned badly. It seems to me that short sales are often like hot tar, everyone, (seller, buyer, lenders, agents) involved gets burned a little and if you don't have thick skin it is going to hurt. A friend (an agent) almost got sued the other month because the bank did not accept a short sale and a buyer had made an offer and got pissed cause the bank later sold the home in foreclosure for less than the offer and the original seller and the buyer blamed the listing agent, when in reality there was nothing he could do, the bank didn't want to mess with a short sale.
"...the bank is for all intensive purposes the seller in control ..."LOL - Freudian Gaff?
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
What I meant was, the actual homeowner doesn't have much say in the transaction. They pick the agent and that's about it. The seller must accept all offers and forward them to the bank, the bank then follows whatever willy-nilly policies they chose. The agent negotiates commission rates, fees, and even title company fees with the bank. I have seen banks not accept short sales because - they don't allow buyer's closing costs to be rolled into the loan, they feel they should get market price from when the home didn't need repairs, they feel the seller's credit has not been hurt enough, they have a policy that says they must originate the loan for the buyer, the bank won't pay certain fees from the title company, they have a "short sale review process of at least 5 months", they won't let the selling agent bring an offer, etc. Saw one where the seller lost his job, had little savings and knew he had to relocate to find another job, so he called the bank right away, told them he was going to have trouble and put the house on the market within a week. He got a near full price offer after a month (good neighborhood) and gave it to the bank who then took 4 months to decide, in that 5 months they tacked on $30k in fees and penalties. If they had moved quickly they would have written off around $2000 off the original note with the seller bringing $5000 to the table but now the bank whined about how much money it was losing and the seller could not bring money to the table because he had spent it trying to live and feed his kids ~ $1200 a month. They could not get it through their heads that they were still actually losing only $7k and not $37k because there were $30k in fees. The home ended up going back to the bank at some point and I think it is still on the market for way more than it is worth. Yeah, it sucks for the banks right now with all the financial problems people are having right now but it seems to me many of these banks are just making problems worse. If you are in a hole and trying to get out, you don't keep digging down but that is what banks are doing even with all these fancy named 'HOPE for Homeowners' programs and the like. Sorry to OP for the hijack and I will end the rant now.
-Day
You were lucky - he told you this before getting you started on the work!
;)
Burned is if you finish it and then he tells you no money on hand.
Look at this from the other side for a laugh - this jerk has already called every contractor within less than an hour's drive with this goofy offer. Just think of the time he has spent doing all this work.
I think his faith is that of the Eternal Barnum who sent out his evangelists saying, "Go forth, and find that fool"
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Join the club, BTDT. Was the realtors name Randy.....John..... Jessica?
Did the homeowner live in Denver or Dallas?
I agree, why not mention the terms BEFORE you drive the 50 miles?
I guarantee that question will get you a dumbfounded look every time.
About a year and a half ago a homeowner asked me the same question, with the assurance that the house would sell quickly.
I declined, and guess what. The house is still for sale. Besides materials and labor, I would have had about $500 in gas expenses alone.
Another time I had a prospective home buyer who was considering a home that was " a little too small", and wanted to know if I would give a free estimate for a new addition, to help her decide if they should buy it.
That was an easy decision........for me anyways.
Yeah, i've gotten more of those than I like to think about. I had one guy drag me across town to estimate a 203b (?). Its an FHA program that allows people buying homes under value to borrow more than pruchase price to fix the house.
First off i've done these before. It took me 4 hours to do the paperwork so I dont even do the etimate for free. He balked at that and on top of it all his budget was completely outl of line.
He basically wanted the house renovated (including the kitchen) for the standard cost of a kitchen.
He called me back. He found some guy to do it all for his price.
I'd like to see how it turned out.
Family.....They're always there when they need you.
People think screwing over contractors is fine and if you protest they call you a jerk.
A builder we work for got a call to replace 60 custom-made windows in an oceanfront home. The homeowner didn't want to put any money up front and expected the builder to front the whole cost of the project, then she'd pay him when it was finished.
He declined.
But in what other business would a customer even ask for something like that?
Yeah I'll drive the Lamborghini around and I'll pay for it when I hit the lottery.
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"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
Most of my customers I know and trust very much, but last year I got a call from one of their friends. She needed a quote on finishing the basement into living space. I went there, spent a few hours discussing the details and measuring up. Got home and spent another couple of hours putting together my estimate. Dropped it off the next day and she was happy with it.
The total came up to $23K and some change. She said she's going to do it and had to get the permit, which means a licensed archy had to draw up plans.. all would take a couple of weeks.
I happened to be driving by the next week and saw 2 pickup trucks loaded with lumber in her driveway, and an electrician's van on the street. So I called the building department.
The customer who referred me got a kick out of it, and said he would have done the same thing.
~ Ted W ~
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